Wednesday, October 06, 2010

6 Oct: Morning Links

4 Oct 2010: Mish: Analysts Cut S&P 500 Profits Forecast; Earnings Estimates Still Overly Optimistic; Stocks Not Cheap

  • Fancy Numbers
    “You need pretty fancy GDP numbers to get to $95 a share in earnings next year,” said Robert Doll, vice chairman of New York-based BlackRock Inc., which oversees $3.2 trillion. “Our view is that they’re still a little too high, and that nobody believes them.”Robert Doll is half-right.

    He's right in that "You need more that fancy earnings to get to $95 a share". He's half-right because the consensus believes. Bear in mind we could still see a bit of earnings expansion, but with the inventory replenishment and stimulus coming to an end, and with consumers heading back into a shell, it will not be sustainable.

Goldman Sachs Sued by German Bank Over Davis Square VI, an AIG CDO Bailed Out by Taxpayers - Janet Tavakoli

  • "Goldman knew at the highest levels of its organization that its representations to LBBW Luxemburg that the notes merited triple-A ratings and were high grade were blatantly false," the Stuttgart-based bank said. "Goldman committed fraud and, or, was negligent in marketing and selling the notes to LBBW Luxemburg."
    "Goldman Sachs Sued Over German Bank's $37 Million Loss on CDO," by Edvard Petterson and Patricia Hurtado, Bloomberg News, October 4, 2010.

ZH: huhu.. Insider Selling To Buying: 2,341 To 1

  • Sorry kids, we just report the news... as ugly as they may be. After last week saw an insider selling to buying ratio of 1,411 to 1, this week the ratio has nearly doubled, hitting a ridiculous 2,341 to 1. And while Wall Street's liars and CNBC's clowns will have you throw all your money into "leading" techs like Oracle and Google, insiders in these names sold a combined $200 million in stock in the last week alone (following Oracle insider sales of $223 million in the prior week). Insiders can. not. wait. to. get. out. fast. enough. This Fed-induced rally is nothing short of a godsend for each and every corporate executive. But yes, there may be value: there was insider buying in 2 (two) companies last week: General Dynamics and Best Buy, for a whopping total of $177,064. At the same time sales were a total of $414 million: so is anyone wondering why JPMorgan is reopening its gold vault... Anyone left holding the bag on this market when the FRBNY props are taken away, will be left with the same return as all those investors who entrusted their money with Madoff. Guaranteed.

Also on ZH: China Has Lost Over $100 Billion In Dollar-Adjusted Terms On Its UST Holdings In A Few Short Months

  • As readers will recall, at the end of July, which was the most recent TIC data update, China owned $847 billion in US Treasury bonds. Since then, the world's reserve currency, which is what said Treasuries are denominated in, has lost 4.7%, or $40 billion in real terms. Yet an even more jarring observation is that from its June highs, the USD has dropped 12.4%. Expressed in real terms from the perspective of China's State Administration of Foreign Exchange, this means that our biggest creditor has lost over $100 billion when adjusted for the purchasing power loss in the dollar.

Unker Bow Tie: Commodities Rally Still Strong, Gold Will Hit $2000: Rogers‎ -

  • "Gold is going to go a lot higher over the next decade. It may slow down for a while because it's run up so dramatically here in the last few weeks. But gold's going to be much higher," Rogers said. "Adjusted for inflation it should be well over $2,000 now. When I say something like it's going to 2,000 in 10 years it's not a very dramatic statement given the state of the world. I'm sure it's a given."

    Rogers said one reason gold will continue to gain is because of what he called the failed policies of the Federal Reserve, its Chairman Ben Bernanke, as well as Treasury Secretary Geithner and other government officials. He said their efforts to prop up the economy have made things worse, not better.

    "They've all been dead wrong, totally unadulterated wrong," he said. "Unemployment is higher now than it was before. Everything is worse instead of better. Let people go bankrupt. Let the system clean out and start over."

    Either way, he said, investors are better off in commodities than stocks and bonds.

Robert Reich: Wall Street’s Global Race to the Bottom - So the race to the bottom is now official. Wall Street will set up its casino wherever financial gambling is least regulated.

On Naked Capitalism: Multi-Billion-Dollar Class Action Suits Filed Against Lender Processing Services for Illegal Fee Sharing, Document Fabrication; Prommis Solutions Also Targeted

And oh... :D